How first-time buyers can get on the property ladder in 2024

Alex Okolidoh, a Norfolk property expert, advises first-time buyers on how to achieve their New Year's resolution.

Did you plan to get on the property ladder in 2023 but couldn't?

Are you making the same resolution in 2024?

If this is the case, I am delighted to tell you that there is light for you at the end of the tunnel.

If you had planned to buy your first home last year but were discouraged by the increasing property prices, along with the high cost of living and excessive expenses such as rent and energy costs, then you may be relieved to know that the situation could change by 2024.

Over the last 12 months, the Bank of England has consistently raised interest rates, leading to a historic 15-year high of 5.25% for the base rate. This has caused mortgage rates to double for some households in the UK. As a result, rising rent has made it difficult for renters to save enough money for a deposit to get on the housing ladder. However, with house prices predicted to keep falling throughout 2024, there is hope for those looking to buy a home.

In fact, 2024 has started with a mortgage price war, as high street lenders have begun slashing fixed rates by nearly 1%. Halifax, the UK's largest lender, has already reduced its rates by 0.92% percentage points on its products, bringing the average two-year deal to 5.92% and five-year fixes to 5.53%, according to BBC News. Other lenders like Leeds Building Society and Generation Homes have also made cuts of up to 1% and 0.67% percentage points, respectively.

As interest rates are expected to fall this year, the Bank of England is set to cut rates six times in 2024, reducing them from a 15-year high of 5.25% to 3.75% by Christmas.

An unprecedented rate war is underway, and 2024 will witness significant shifts in rates compared to previous years.

For those who can capitalise in 2024 on the falling mortgage rates and subdued property prices, renters will be presented with a lifetime opportunity to get on the property ladder.

If you want to get to the property ladder in 2024, here is my top advice.

Start saving with a LISA

As a first-time buyer, consider putting your savings into a Lifetime Isa (LISA), which comes with a government bonus.

What is a lifetime Isa?

The lifetime Isa (Lisa) is a tax-free savings or investments account designed to help those aged 18-39 at the time of opening to buy their first home or save for retirement.

The main selling point of lifetime Isas is the generous 25% bonus the government pays on your savings when you come to use them, up to a maximum of £1,000 per annum.

If you have a qualifying partner, you can both benefit from the scheme.

Monitor your credit score and find creative ways to improve it

It's important to check your credit score before applying for a mortgage. If you find any negative information, it's better to work on repairing your credit record before applying for the mortgage.

If you want to achieve your New Year's resolution, the free Experian Boost service should be a part of your toolkit.

Consider reporting your monthly rental payments to a credit agency. Doing so will increase your credit rating and demonstrate to mortgage lenders that you can manage your finances and are a reliable borrower.

If you have any outstanding loans and can pay them off, do so. This will boost your credit rating and increase the amount that you can borrow in the future.

You will need to find a mortgage broker when you are ready to buy, and a mortgage broker will discuss all your options with you.

Remember that your agreement, in principle, will be valid for 6 months, giving you ample time to find a suitable property.

Don't be so rigid in your requirements; be mindful of your budget

If you really want to get on the property ladder in 2024, you must be prepared to make some concessions. For example, do you need a 3-bed detached house, or can you make do with a 3-bed semi-detached house or even a 2-bed one? Will you consider an allocated parking space instead of a garage?

Think long-term! It will be easier to move from a 3-bed semi-detached house to a 4-bed detached house in a few years, assuming that house prices will rise in the next 3-5 years, which they always do in the long term as you would have built some equity, making it easier for you to have more deposit. So, my advice is to make some sacrifices today and get on the property ladder in 2024. Remember, my advice is how to get on the property ladder in 2024, not how to buy your dream home in 2024.

Also, don't not overexpose yourself by borrowing more than you can afford to re-pay monthly.

Consider extending the term of the mortgage over a longer period so that monthly payments are lower- but bear in mind that this will mean you will be paying interest on the mortgage for longer term and do not forget to think of when you are likely to retire as you do not want to have a huge mortgage well into your retirement.

Hire a negotiating agent to represent your interest

This service is offered exclusively by agents to buyers when they are not acting for the vendor. You can hire an agent to represent you in your property purchase transaction. Buying agents are common for buyers at the high end of the market. Still, buyers at the lower end of the market should also engage a buying agent as they are the people who need to save every penny. The savings you make should be more than the fees you pay. First-time buyers with no representation will be even more disadvantaged negotiating against the vendor's professional agent, who is paid to achieve the highest offer possible for their client.

When searching for a property, a good buying agent will help you list what you really need, your three non-negotiables and your three nice-to-haves. It would help to decide on your maximum amount before you search. Once you have found a property, you should put your offer in writing, use leverage when negotiating, ask for something in return and sometimes you should re-negotiate if there are any adverse findings in the property that you are buying and don't be afraid to walk away.

Here at Melanie Estates, we represent clients purchasing a property not being sold by us. Our job is simple: to save you, the buyer, money and time.

For more details, visit our buyer service.

You can also download your FREE copy of Property Negotiation Do's and Don'ts.

Look at pairing up with family or friends.

If you have a close friend or a family member, consider coming together to buy. Joining forces with someone else increases your borrowing power, meaning you can buy a bigger property. You can also split the household bills and the building insurance.

If you want to explore this option, you should engage a solicitor to draw an agreement between the parties involved, stating very clearly the ownership structure that you have agreed, the amount of deposit each person has contributed and how the proceeds will be shared whenever you decide to sell.